Indonesia’s major coal miners reported a significant drop in their earnings last year as the sharp drop in the global demand, mainly from China, continued to undermine their sales performances during the year.

Major coal producer Adaro Energy, for instance, announced a full-year financial result for 2014 that showed a nearly 24 percent decline in its net profit to US$178.16 million, compared with $233.96 million.

“The macro situation was difficult last year as coal prices continued to be under pressure due to oversupply and overcapacity in the market. We anticipate the challenging conditions to remain in 2015,” Adaro Energy president director Garibaldi Thohir said in a written statement.

“Our focus will be on operational excellence, preserving cash and on business development, including strengthening our logistics business and moving downstream into power.”

The global coal market has been constrained in the past year as demands from China declined 22 million tons in 2014 due to an oversupply condition in the Chinese market as well as several policies to limit imports, such as the new 6 percent import tax on thermal coal and new quality controls.

Further, the Chinese economy, which buys almost half the world’s coal and ore cargoes, will grow in 2015 at the slowest pace in 25 years, economists’ forecasts compiled by Bloomberg show.

Adaro saw its average selling price (ASP) for the year plunge by 5 percent year-on-year (yoy). It said that China’s lower demands and import restrictions have little impact on the company given its high quality coal and its ability to take advantage of a free trade agreement between ASEAN and the East Asian country.

The company’s annual revenue was up by one percent to $3.32 billion, despite a higher sales volume up to 7 percent to 57 million tons.

Indonesia’s coal price reference (HBA) dropped by 27 percent last year and continued to decline to hover at around $63 per ton last month. The international coal prices benchmark Newcastle declined 17 percent in 2014, averaging $70.95 per ton due to the persistent oversupply.

Coal miner Indo Tambangraya Megah also ended 2014 with net sales down by 11 percent to $1.94 billion in 2014 from $2.18 billion the previous year.

Its average selling price slid 10 percent yoy, from $74.9 a ton to $67.1 per ton last year, while its sales volume stagnated at around 29 million tons.

The company saw its net profit slightly down to $200.22 million — compared with $204.98 million generated in 2013 — largely because of cost reductions.

Ariyanto Kurniawan from Mandiri Sekuritas said that 2015 would be yet another difficult year for the country’s coal producers. With such an unfavorable market situation, the securities firm decided to lower coal miner’s net profit forecast for 2015 and 2016 by around 45 percent in average, with coal price assumption set in between $65 and $70 per ton.

“Plunging trends in coal prices, now in its fourth year, have entered the longest cycle since 2007. We see that declining coal prices will hit its lowest level […] and there will be no sharp improvement given weak demands and lack of supply discipline from market players,” he said in a written statement.

“We see there are risks if coal prices remain low, which include lower consensus net profit estimation, production cuts, declining coal supply and further lower asset value.”

Ariyanto said that the cost reduction initiative — including negotiating with the mining contractor — as well as a drop in oil prices that is expected to deflate energy spending, will be the main factors in maintaining the companies’ profitability.